stating mining activities in south africa

mining duties, royalties and taxes in south africa - lexology

The Mineral and Petroleum Resources Royalty Act 28 of 2008 (Royalty Act) sets out the revenue-based royalties payable on mineral resources that are extracted within South Africa and transferred. The Royalty Act differentiates between refined and unrefined mineral resources. The mining royalty percentage is capped at 5 per cent for refined mineral resources and 7 per cent for unrefined mineral resources. The Royalty Act uses two variables to calculate the royalty liability - the value of the minerals and the royalty percentage rate, which is applied to the base. In addition to the payment of royalties, mining companies may also be subject to income tax capital gains tax, withholding tax, transaction taxes such as VAT, transfer duty and securities transfer tax.

Gold mining companies are taxed in terms of a formula that, by and large, takes into account the profitability of the company and provides relief in cases where margins are below 5 per cent (often referred to as the tax tunnel). The gold mining formula was introduced to encourage gold mining investment and the mining of marginal ore deposits. Mining companies mining for minerals other than gold are taxed at the standard corporate tax rates.

The Royalty Act provides that the Minister of Finance may enter into binding fiscal stability agreements relating to mineral resource rights or in anticipation of such rights, guaranteeing that the terms and conditions in respect of these rights apply for as long as the extractor holds the rights.

The MPRDA contains no provision that entitles the government to a carried interest or free carried interest in mining projects. Mining Charter III, however, provides that host communities and qualifying employees must each hold a minimum of 5 per cent non-transferable carried interest in applicants for new mining rights. It is unclear how this is different from a free carried interest and the definition accordingly is misleading.

In terms of capital gains, the Income Tax Act provides for capital gains tax (CGT) on any taxable capital gains in the taxable income of any person. In calculating the taxable income, a mine is entitled to claim expenditure against its mining income. Previously, the disposal of certain assets was exempt (for income tax purposes) as it was regarded capital in nature. The position has now shifted and the disposal of specific mining-related assets (eg, land, surface rights, assets that qualify for wear and tear, mineral rights, prospecting rights and intellectual property rights, etc) will now be taxable in terms of the new CGT legislation.

Resident companies in South Africa are taxed based on their world-wide income and non-residents are taxed on South African sourced income subject to any applicable double taxation agreements that may be in force. Non-residents are, in addition, subject to the CGT legislation as detailed above. Foreign companies that conduct business in South Africa through a branch must also be registered as taxpayers and they are taxed at the standard corporate tax rate of 28 per cent.

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gold mining in south africa | an overview for gold investors | inn

Gold and diamond discoveries played an important part in the growth of the early Republic of South Africa. Historically, the country was the worlds largest gold producer for many years before conceding the top spot to China in 2007.

South Africa is currently estimated to have the worlds second largest quantity of gold reserves at 6,000 tonnes; however, China has maintained its leading position in gold production through the end of 2018, followed by Australia, Russia and the United States.

South Africa produced 120 tonnes of gold in 2018 and remains a top 10 gold producing country. Read on to learn more about South Africas geological and economic landscape, the regions growth potential and a list of gold producers that currently have assets in South Africa.

South Africas expansive gold ore deposits represent a considerable part of the worlds reserves, with approximately 95 percent of the mines operating underground reaching depths of over 3.8 kilometers. The main gold producing area is concentrated on the Archaean Witwatersrand Basin (Wits). The Wits has been mined for more than 100 years, produced more than 41,000 tonnes of gold and remains a relatively underdeveloped source of the yellow metal.

The Wits is a gold placer deposit, unlike most other gold deposits in the world, with gold being hosted by conglomerates and grits. The sedimentary basin is massive and stretches through an arc of approximately 400 kilometers across the Free State, North West and Gauteng provinces. The gold bearing conglomerates or reefs are generally tabular with varying dips.

Most of the Wits is covered by later stage sediments of the Ventersdorp and Karoo groups, with an outcropping in Johannesburg, which started the countrys gold rush and resulted in formation of the city of Johannesburg. South Africa does have other smaller gold producing regions outside of the Wits in the form of Archaean greenstone belts.

The main gold producing greenstone belts are the Barberton greenstone belt and the Kraaipan greenstone belt. The Barberton greenstone belt is situated in the Mpumalanga province, just north of Swaziland. The Kraaipan belt is located west of Johannesburg, near Kuruman.

South Africa reaped the benefits of macroeconomic stability and a global commodities boom from 2004 to 2008; however, growth began to slow in the second half of 2008 due to the global financial crisis impact on commodity prices and demand. Additionally, South Africa began to experience an electricity deficit towards the end of 2007. The national power supplier encountered problems with aging generating stations, which necessitated load-shedding cuts to businesses and residents in the major cities.

South Africas former economic policy has traditionally been fiscally conservative, focusing on attaining a budget surplus and controlling inflation. The current government largely follows the same prudent policies, but must contend with the impact of the global crisis and face growing pressure from special interest groups to use state-owned enterprises to deliver basic services to low-income areas and to increase job growth.

More than one-quarter of South Africas population currently receives social grants. Unemployment remains relatively high and outdated infrastructure has constrained growth. Legacy economic problems remain from the apartheid era especially poverty, lack of economic empowerment among disadvantaged groups and a shortage of public transportation.

In terms of the gold mining industry, the Minerals Council of South Africa (MCSA) has reported that 101,085 workers are employed in the South African gold sector. The council also notes that productivity has declined while wages have risen. Despite this, gold mining activities remain a mainstay of employment in many communities around the country, and every employee in the gold sector supports between five and 10 other dependants, states the MCSA. On the upside, every direct job in the mining sector results in two indirect jobs being created elsewhere.

The Minerals Council of South Africa (MCSA) has reported that mining contributed351 billion rand (7.3 percent) to South Africas gross domestic product (GDP) during 2018, up from 335 billion rand (6.8 percent) in 2017. Total employee earnings have made large gains from 14.7 billion rand in 2007 to 26.5 billion rand last year.

Additionally,gold sales declined by 15 percent to land at R69.9 billion in 2018, down from the R82.7 billion in 2017. The gold industry in South Africa also took a hit when its gold production decreased to 132.2 tonnes last year, down from the 136.8 tonnes of output in the prior year. It is worth noting that South African gold only accounts for 4.2 percent of global gold production.

In recent years, South Africa has been hit with political strife, mostly due to conflicts between the Association of Mineworkers and Construction Union (AMCU) and gold producers in the area. AMCU has held many protests and strikes at several gold and platinum mines within the last two years in the hopes of garnering more wages and stopping any merger between companies in which the union believed job loss would ensue.

In 2017, South Africa proposed a suspension on the granting of applications for prospecting and mining rights pending a court case to review new mining laws. As a result, share prices of some of the mining companies operating in the country dipped. Sibanye-Stillwater (NYSE:SBGL,JSE:SGL), South Africas largest gold producer, lost 1.61 percent on the back of the news, and AngloGold Ashanti (ASX:AGG,NYSE:AU), the worlds third-biggest gold producer, saw its share price decrease by 0.91 percent.

Towards the beginning of last year, AngloGold called for better mining regulations in South Africa. At present, we have anything but a conducive regulatory environment, the miner said. The relationship between the Department of Mineral Resources and industry is at an all-time low. The company further stated that targets are changed every time the countrys mining charter is reviewed.

Aside from regulations, AngloGold also let it known that it thinks the South African mining industry would benefit from a more stable political environment, revitalized rail and port infrastructure, investment promotion and a better understanding of financial returns and fund flows.

Furthermore, later that same year AngloGold stated that South Africa faces inevitable decline in gold production as shrinking output shows no sign of stopping. The miner noted that the countrys output will continue to shrink as miners hunt for deeper orebodies while trying to cut costs, leaving companies with operations in South Africa, AngloGold included, to question their future there.

Despite economic and political concerns in the region, there is still room for growth in the gold space. One of the ways that gold miners in the region can increase productivity is through adopting technology geared to the mining industry, which could improve key dimensions of the drilling process.

In the medium and long term, localizing the value chain from mining operations, expanding downstream processing for key commodities and unlocking the potential of the countrys rich ore bodies are all possible in South Africa.

Increased investments in the mining sector is also extremely important in acceleration of South Africas economy. With the advancement of technologies and innovations on how gold is mined, the life of a mine can extend to 30 years or more and increased investment into these practises will garner more monetary advancement within the industry. According to the McKinsey Global Institute, production costs in South Africa have the potential to be cut by close to 20 percent in the medium term.

Finally, working with local communities within South Africa will also cause a growth in gold mining. By working on increasing the skills and safety of the individuals who work, or may one day work, at various gold mines in the region will help to increase productivity.

Although South Africa is not currently experiencing the economic prosperity it experienced from the mining industry a decade ago, there are still large miners in the country that have been producing impressive amounts of gold. Below is a list of current gold producers in South Africa with a market cap of over US$2 billion as of September 3, 2019.

Sibanye currently holds five gold assets in South Africa: Beatrix, Driefontein, Kloof, Cooke and the Rand refinery. Additionally, the miner acquired a 38.05 percent stake of DRDGold (NYSE:DRD,JSE:DRD) in August of last year. DRDGOLD operates the West Rand Tailings Retreatment project (WRTRP), which Sibanye has invested in.

In 2018, total gold production declined by 16 percent from the previous year to 1,176,600 ounces. This occurred primarily because of two safety-related incidents in the first half of the year, one at Driefontein and the other at Kloof.

However, Sibanye believes that its gold production will climb this year and is heavily invested in its Burnstone project located in the Mpumalanga province. The gold miner has stated that this project is its most advanced, with its Southern Free State project in the study phase. Despite setbacks that South Africa has experienced, Sibanye continues its steady growth in the region.

Gold Fields is one of the worlds largest unhedged producers of gold. Its main focus is on its South Deep asset, the countrys largest and deepest underground mechanised gold mine, in addition to gold reserves in Ghana, Australia and Peru. Gold Fields is primarily involved in underground mining in South Africa, although in Peru it has exposure to surface gold and copper mining and related activities, including exploration, processing and smelting.

In recent years, South Deep has been a money pit for the company, causing it to lose approximately 100 million rand a month, but Gold Fields has a plan in place to restructure and increase the assets value.

The company plans to save close to 3,500 jobs and turn a profit by reducing mining areas, lowering overhead costs and using fewer machines more productively. Additionally, in July of this year, Gold Fields announced that it was collaborating with mining students at Wits University in order to build South Africas capacity to apply mechanised mining methods and supporting technologies in deep-level gold mines. In turn, the hope is that this will boost production levels at the Deep South asset.

Mponeng, the worlds deepest gold mine and the companys flagship South African operation, is in the West Wits mining district south-west of Johannesburg. Mponeng exploits the Ventersdorp Contact Reef (VCR) via a twin-shaft system at depths of between 2,800 meters and 3,400 meters below surface. Ore is treated and smelted at the mines gold plant.

The Surface operation processes and extracts gold from marginal ore dumps and tailings storage facilities. Surfaces operations also include mine waste solutions; the waste is extracted hydraulically from various tailings storage facilities. Backfill is produced as a by-product, for use as mining support in mined out areas underground.

Harmony Golds operations are located primarily on the Witwatersrand Basin, encompassing 10 underground operations, an open-pit mine and surface operations that span four provinces, namely Gauteng, North West Province, Mpumalanga and the Free State.

In 2018, the companys total attributable gold equivalent mineral resource was 117.8 million ounces of gold, a 13 percent increase year-on-year from the 104.3 million ounces reported in 2017. The yellow metal contained in the mineral resources at the South African operations represented 60 percent of Harmonys total gold production.

Additionally, Harmonys total attributable gold and gold equivalent mineral reserves amounted to 36.8 million ounces of the precious metal, a 0.3 percent increase from the 36.7 million ounces the company declared the previous year. Gold reserve ounces at the miners South African operations accounted for 46 percent during 2018.

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As an individual you can invest in these companies in a variety of ways, the simplest of which might be using your own bank and opening a brokerage account. Depending on where you live a brokerage firm is also a possibility in order to serve a clientele of investors who trade public stocks and other securities. Some brokers, like Bank of America, have now offered no-commission trades to their clients that have a specific amount of money with them. A discount brokerage is another alternative helping clients buy and sell securities on a stock exchange. Discount brokerages usually allow their clients to trade for their own account with little or no action with a live broker. Discount brokers, like TD Ameritrade, PTI Securities & Futures and E-Trade, also provide advanced trading systems, which is why they appeal most to frequent and active traders. Beginner investors may turn away from discounted brokers because of the advanced systems and terms, and instead go to traditional brokers. Whether you select your own bank to provide brokerage service or you opt for a discount brokerage, a traditional brokerage or a full-service discount brokerage, most brokers are regulated and licensed by a national trading authority.

As an individual you can invest in these companies in a variety of ways, the simplest of which might be using your own bank and opening a brokerage account. Depending on where you live a brokerage firm is also a possibility in order to serve a clientele of investors who trade public stocks and other securities. Some brokers, like Bank of America, have now offered no-commission trades to their clients that have a specific amount of money with them. A discount brokerage is another alternative helping clients buy and sell securities on a stock exchange. Discount brokerages usually allow their clients to trade for their own account with little or no action with a live broker. Discount brokers, like TD Ameritrade, PTI Securities & Futures and E-Trade, also provide advanced trading systems, which is why they appeal most to frequent and active traders. Beginner investors may turn away from discounted brokers because of the advanced systems and terms, and instead go to traditional brokers. Whether you select your own bank to provide brokerage service or you opt for a discount brokerage, a traditional brokerage or a full-service discount brokerage, most brokers are regulated and licensed by a national trading authority.

environmental regulations for mining activities in south africa - lexology

The National Environmental Management Act 1998 (NEMA) is the framework legislation regulating the environment. The DMR is the competent authority responsible for enforcing the NEMA insofar as it relates directly to prospecting and mining activities. The Minister of Environmental Affairs, however, is the authority responsible for creating regulations under NEMA (including regulations that the DMR must apply and enforce). The Minister of Environmental Affairs is also the ultimate authority in respect of appeals against environmental authorisations, compliance notices or directives issued by the DMR.

The DMR is the competent authority for approving environmental authorisations for prospecting and mining activities and activities directly associated therewith. The DMR is also responsible for enforcing the provisions of the NEMA or the environmental authorisation.

Applicants for a prospecting or mining right must apply for and obtain an environmental authorisation under NEMA before the right is granted. Depending on the activities that the applicant will undertake, the applicant must conduct either a basic assessment or a scoping assessment and environmental impact assessment to investigate and assess the impacts of the activities on the environment. These processes must include a public participation process with all interested and affected persons. The outcomes of the assessment, investigations and public participation process are included in a report and submitted to the DMR for consideration. If the DMR is satisfied with the report and the mitigation measures contained therein, an environmental authorisation may be issued. In terms of the One Environmental System, this process should take 300 days.

An applicant or holder of a right or permit must determine and make financial provision to guarantee the availability of funds to undertake rehabilitation and remediation of the impacts arising from the prospecting or mining activities. The financial provision can be by way of financial bank guarantee, deposit into an account administered by the Minister of Mineral Resources, or a contribution to a trust fund.

A waste management licence under the NEMWA is required for the creation of residue stockpiles. Applicants for waste management licences must complete an environmental impact assessment process in accordance with NEMA. The MPRDA Regulations require that stockpiles are to be designed by competent persons such as registered engineers. This includes civil or mining engineers registered under the Engineering Profession of South Africa Act 114 of 1990. Stockpiles must comply with landfill requirements as well as with the National Norms and Standards for the Assessment of Waste for Landfill Disposal 2013 and National Norms and Standards for Disposal of Waste to Landfill 2013.

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mining and community struggles on the platinum belt: a case of sefikile village in the north west province, south africa - sciencedirect

The rapid expansion of platinum mining into rural communal land in the former homeland areas in South Africa generates intense intra-community struggles.Local struggles are fought mainly through group identities as social markers to exclusive group rights.There is limited empirical focus on the character of these struggles at village level.The ethnographic case study of Sefikile village demonstrates that the post-apartheid minerals policy reform has failed to grasp the complex character of rural communities on whose land platinum mining expands.South Africas mineral policy cannot adequately address the escalating disputes and grassroots marginalisation at village level.

The ethnographic case study of Sefikile village demonstrates that the post-apartheid minerals policy reform has failed to grasp the complex character of rural communities on whose land platinum mining expands.

The rapid expansion of platinum mining into rural communal land in the former homeland areas of South Africa has caused intensive intra-community struggles. To date, however, there has been limited empirical focus on the character of these struggles at the village level. In this article, I attempt to narrow this gap by drawing on a detailed ethnographic case study of Sefikile village in the Bakgatla-ba-Kgafela traditional authority area, North West Province. The analysis illustrates how the post-apartheid mineral policy's reform has failed to grasp the complex character of rural communities found on lands where platinum mining has expanded. The findings drawn from Sefikile a village that hosts one of the oldest platinum mines in South Africa reveal intense struggles over land, mining revenues and public services. Such struggles are fought mainly through distinct group identities as social markers to exclusive group rights. The current mineral policy is incapable of adequately addressing the escalating disputes and marginalisation at the village level.